It's October 2008: where do you save now?

Another day, another three-digit drop (or jump) in the Dow Jones Industrial Average.

The Dow is one of the most widely reported financial statistics. We can hardly help hearing about it, especially when it makes the headlines.

It may actually mean something to investors, who have by and large sustained staggering losses these past several months. Even if you're not an investor, you're probably wondering what you should do about all this financial turmoil.

While these unsteady times should prompt different action steps by different people, most Americans should consider filling a glaring gap in their financial plans:

They should put more money into their emergency funds.

It's generally agreed that too few households have enough in emergency cash reserves. So if you're trying to figure out where your new savings should go in these financial times, it's a decent bet you're one of the many people who should have a larger cash reserve. This could be for emergencies or just to free you from feeling like you might need to spend on a credit card.

The question of whether stocks are about to go lower or higher really should interest only those who have enough cash to tide them over until this financial crisis has passed. If that's you, great. If it's not, it's questionable whether (or how much) you should have in stocks in the first place.

If you save money out of every paycheck, and you're not certain where it should go in times like these, put it in FDIC-insured savings accounts, or a guaranteed account in your 401(k) or other retirement savings plan. True, such accounts might not be ideal for your unique circumstances, But it's better to save, even imperfectly, than not to save at all.

Remember, your emergency funds and other cash reserves aren't intended to make money. They're intended to be safe. And as good savers have long known, when the stock market is especially volatile a little extra safety feels very reassuring.

(By the way, to learn how to save more money out of every paycheck, look for my forthcoming book, Don't Make a Budget: Why It's So Hard to Save Money and What to Do About It, due out in January 2009.)

Copyright © 2008 by Kenneth F. Robinson, all rights reserved.